EnLink Midstream Expands Common Unit Repurchase Authorization, Increases Quarterly Distribution, and Updates Financial Policy

Rhea-AI Summary

EnLink Midstream, LLC (ENLC) announced the completion of its 2023 common unit repurchase authorization, approval of a 2024 unit repurchase plan, a 6% increase in quarterly distribution, and a revised long-term leverage target. The company also scheduled a webcast and call to discuss 2023 earnings and 2024 guidance.

Insights

Financial Analyst

The completion of EnLink Midstream, LLC's expanded 2023 common unit repurchase program and the authorization of a new repurchase plan for 2024 indicates a strong balance sheet and commitment to returning value to shareholders. The repurchase of $250 million in common units, including a significant transaction with Global Infrastructure Partners, suggests confidence in the company's liquidity and financial stability. Moreover, the repurchase of approximately 9% of total outstanding units since early 2022 could be viewed favorably by the market as it may lead to earnings per unit accretion and a potential increase in the unit price due to the reduced supply.

The increase in the quarterly distribution by approximately 6% is a positive signal to investors, reflecting the company's ability to generate sufficient free cash flow to fund distributions and its investment program. The updated financial policy, with a reduced long-term leverage target to 3.5x debt-to-EBITDA from below 4.0x, demonstrates a disciplined approach to financial management and a focus on maintaining a strong credit profile, which could enhance investor confidence and potentially lower the cost of capital for future investments.

Market Research Analyst

EnLink's decision to lower its leverage target to 3.5x debt-to-EBITDA is indicative of a broader industry trend towards deleveraging and balance sheet optimization. This strategy can be particularly appealing to investors who prioritize financial health and risk management. By showcasing a leverage ratio that is below the previous target and stands at 3.4x as of the third quarter of 2023, EnLink aligns itself with the conservative fiscal practices that are well-regarded in the midstream sector. This could potentially make EnLink's units more attractive to risk-averse investors and may also provide a buffer against market volatility.

Furthermore, the company's proactive communication strategy, including the scheduled webcast to discuss earnings and financial guidance, exemplifies transparency and could strengthen stakeholder relations. The consistent repurchase execution and the increase in distributions signal a shareholder-friendly capital allocation policy, which may positively influence investor sentiment and could be a catalyst for unit price appreciation.

Energy Sector Analyst

The execution of a common unit repurchase plan and the subsequent authorization of a new plan, coupled with an increase in quarterly distributions, reflect EnLink Midstream's operational efficiency and strategic asset management, particularly in the context of the energy sector. The utilization of proceeds from the sale of Ohio River Valley assets to both repurchase units and reduce debt demonstrates a balanced approach to capital reallocation that supports both unitholder value and financial stability.

EnLink's focus on maintaining a lower leverage ratio is consistent with industry practices where midstream companies aim to manage their debt levels carefully to navigate the cyclicality of commodity prices. The updated financial policy may resonate well with stakeholders who are aware of the volatility in the energy markets and the importance of maintaining financial flexibility to mitigate risks associated with fluctuating energy prices.

The company also schedules webcast and call to discuss quarterly and year-end earnings and 2024 guidance

DALLAS, Jan. 16, 2024 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) announced today that the EnLink Board of Directors (Board) completed its expanded 2023 common unit repurchase authorization of $250 million, authorized a 2024 common unit repurchase plan, increased its quarterly distribution for the fourth quarter of 2023 by approximately 6%, and updated EnLink's financial policy to reflect a long-term leverage target of 3.5x debt-to-EBITDA.

EnLink also announced it will host a webcast and conference call on Wednesday, February 21, at 8 a.m. Central time to discuss its fourth quarter and full-year 2023 earnings, along with 2024 financial guidance. 

Increased 2023 Common Unit Repurchase Execution
In November, the Board increased the 2023 common unit repurchase authorization by $50 million to $250 million. The increase reflected the generation of strong free cash flow after distributions, as well as the use of a portion of the proceeds of the sale of EnLink's Ohio River Valley (ORV) assets. A portion of the ORV proceeds was also used to reduce debt, resulting in a leverage-neutral transaction. EnLink fully executed the expanded 2023 common unit repurchase program, including approximately $42 million of common units repurchased from Global Infrastructure Partners (GIP), pursuant to our 2023 Unit Repurchase Agreement, which will settle on February 19, 2024.

Authorized New 2024 Unit Repurchase Plan
The Board authorized a new $200 million unit repurchase plan for 2024. This marks the third consecutive year that the Board has authorized a significant unit repurchase plan. Following consistent repurchase execution since early 2022, EnLink has repurchased approximately 42 million units, which represents approximately 9% of total outstanding units at the end of 2021. GIP will also participate in the 2024 unit repurchases through its execution of a Unit Repurchase Agreement for 2024.

Increased Quarterly Distribution for Fourth Quarter of 2023 
The Board declared a cash distribution of $0.1325 per common unit for the fourth quarter of 2023, which represents an increase of approximately 6% from the third quarter 2023 distribution. The fourth quarter 2023 cash distribution will be paid on February 9, 2024, to unitholders of record on January 29, 2024.

Updated Financial Policy
EnLink lowered its long-term leverage target to 3.5x debt-to-EBITDA. EnLink's previous target was below 4.0x. The updated policy reflects progress made on deleveraging and strengthening the balance sheet, EnLink's solid financial and operational performance, and management's confidence in the long-term outlook of the business. At the end of the third quarter of 2023, EnLink's leverage stood at 3.4x.

Fourth Quarter, Full-Year 2023 Earnings and 2024 Financial Guidance Webcast Details
EnLink will host a webcast and conference call on Wednesday, February 21, at 8 a.m. Central time to discuss fourth quarter and full-year 2023 earnings, along with 2024 financial guidance. The conference call will be broadcast via an internet webcast, which can be accessed on the Investors page of EnLink's website Investors.EnLink.com. Interested parties can access an archived replay of the webcast on EnLink's website for at least 90 days following the event.

EnLink's investor presentation and earnings press release will be posted on the Investors page of EnLink's website at Investors.EnLink.com after market close on Tuesday, February 20.

All dates and times are subject to change. Any timing updates, along with participation instructions for the webcasts and conference calls, will be provided via press release prior to the event.

About EnLink Midstream
Headquartered in Dallas, EnLink Midstream (NYSE: ENLC) provides integrated midstream infrastructure services for natural gas, crude oil, and NGLs, as well as CO₂ transportation for carbon capture and sequestration (CCS). Our large-scale, cash-flow-generating asset platforms are in premier production basins and core demand centers, including the Permian Basin, Louisiana, Oklahoma, and North Texas. EnLink is focused on maintaining the financial flexibility and operational excellence that enables us to strategically grow and create sustainable value. Visit www.enlink.com to learn how EnLink connects energy to life.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Although these statements reflect the current views, assumptions and expectations of our management, the matters addressed herein involve certain assumptions, risks and uncertainties that could cause actual activities, performance, outcomes and results to differ materially from those indicated herein. Therefore, you should not rely on any of these forward-looking statements. All statements, other than statements of historical fact, included in this press release constitute forward-looking statements, including but not limited to statements identified by the words "forecast," "may," "believe," "will," "should," "plan," "predict," "anticipate," "intend," "estimate," "expect," "continue," and similar expressions. Applicable uncertainties, factors, and risks are described more fully in EnLink Midstream, LLC's filings with the Securities and Exchange Commission, including EnLink Midstream, LLC's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. EnLink assumes no obligation to update any forward-looking statements.

Investor Relations: Brian Brungardt, Director of Investor Relations, 214-721-9353, brian.brungardt@enlink.com
Media Relations: Megan Wright, Director of Corporate Communications, 214-721-9694, megan.wright@enlink.com

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SOURCE EnLink Midstream, LLC

FAQ

What is the ticker symbol for EnLink Midstream, LLC?

The ticker symbol for EnLink Midstream, LLC is ENLC.

What did EnLink announce regarding its common unit repurchase authorization?

EnLink completed its expanded 2023 common unit repurchase authorization of $250 million and authorized a 2024 common unit repurchase plan.

What was the increase in EnLink's quarterly distribution for the fourth quarter of 2023?

EnLink increased its quarterly distribution for the fourth quarter of 2023 by approximately 6%.

What is EnLink's updated long-term leverage target?

EnLink's updated long-term leverage target is 3.5x debt-to-EBITDA, reflecting progress made on deleveraging and strengthening the balance sheet.

When is EnLink hosting a webcast and conference call to discuss its fourth quarter and full-year 2023 earnings, along with 2024 financial guidance?

EnLink will host a webcast and conference call on Wednesday, February 21, at 8 a.m. Central time to discuss its fourth quarter and full-year 2023 earnings, along with 2024 financial guidance.